Town Square

Home sales, job creation could rise with sensible lending standards

Original post made
on Oct 15, 2012

New survey findings, combined with an analysis of historic credit scores and loan performance, show home sales could be notably higher by returning to reasonably safe and sound lending standards, which also would create new jobs, according to the National Association of Realtors.

Posted by William Tell
a resident of Another Pleasanton neighborhood
on Oct 15, 2012 at 1:58 pm

Can't do this in California because it directly contradicts Governor Brown's job cutting/exportation strategy. Besides, the entitlement class would have to sue the banks because requiring 20% down for a house and requiring the income to pay a mortgage from "traditionally disadvantaged folks" is inherently racist.

Posted by Dave Walden
a resident of another community
on Oct 16, 2012 at 9:33 amDave Walden is a registered user.

I would not expect standards to ever revert to the early 2000's and in fact not even loosen at all in the foreseeable future. The savior of the first time home-buyer and those who don't have 20% down payment handy, FHA, is raising their up front mortgage insurance and monthly mortgage insurance so high that it is hard for anyone to qualify. An example, I was trying to refinance a client to take them from 4.625% interest rate to 3.75% on their FHA loan that they took out in 2010. The new payment with the new mortgage insurance monthly rate was $10 per month higher. FHA is experiencing losses and needs to shore up their position in the market.

With the Fed now buying up mortgage backed securities again, we are in line for inflation and that means higher rates. Higher rates and strict standards make for a challenging market for the home buyer for some time to come.